Bitcoin as an API for Money: Creating Money-As-a-Service

Bitcoin APIs are exploding, with 45 of them listed in our directory, many created recently, suggesting their growth is still ramping up. But three APIs from the network are at the center. Andreas Antonopoulos of O'Reilly Radar points out that thinking of Bitcoin as digital money is just the tip of a larger iceberg:

"In a traditional financial network, trust is achieved through a complex web of regulations, fraud detection, and accreditation — but most of all exclusion. Financial networks remain secure by keeping the APIs closed and inaccessible except to the few who are trusted, and thereby keep out bad actors (at least in theory). Bitcoin shifts the model from “trust by exclusion” to “trust by computation.” Trust is distributed across a large (and ever-growing) network of collaborators who continuously check one another, making it increasingly difficult for any bad actor — or even a set of bad actors — to hijack the network. As a result, there is no need for exclusion or access controls. Anyone can participate in the Bitcoin network and see all the transactions, or rather everyone can access the APIs."

The three APIs are the transaction scripting language, the P2P network protocol API, and what Antonopoulos calls "the 'northbound' client API that exposes the Bitcoin economy as a set of JSON-RPC services for client applications." Here's what all this means. The first transaction language defines transactions, making it possible to decide how many people have to sign off on a transaction: a small amount usually means just one person; more money may mean double or even triple signatures. The P2P API helps people share data about transactions, allowing you to give your accountant access to transaction records, for example. The last API gives you an ability to create the standard banking services--wallets, transactions and so on.

Antonopolous makes an interesting point: this is all possible because the trust that any financial system requires to function is built differently. Rather than exclude those who shouldn't have access, Bitcoin works on trust by "computation," a network that is always cross checking itself through its participants. Access to the APIs is available to everyone.

About the author:Greg Bates
A writer for Programmableweb since 2012, Greg is a freelance writer and a maniacal editor of dissertations and term papers. - Follow me on Google+